Returns On Capital Are A Standout For Schaeffler India (NSE:SCHAEFFLER)

Did you know there are some financial metrics that can provide clues of a potential multi-bagger? Ideally, a business will show two trends; firstly a growing return on capital employed (ROCE) and secondly, an increasing amount of capital employed. Basically this means that a company has profitable initiatives that it can continue to reinvest in, which is a trait of a compounding machine. With that in mind, the ROCE of Schaeffler India (NSE:SCHAEFFLER) looks great, so lets see what the trend can tell us.

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Understanding Return On Capital Employed (ROCE)

If you haven't worked with ROCE before, it measures the 'return' (pre-tax profit) a company generates from capital employed in its business. The formula for this calculation on Schaeffler India is:

Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities)

0.24 = ₹13b ÷ (₹73b - ₹18b) (Based on the trailing twelve months to September 2025).

Therefore, Schaeffler India has an ROCE of 24%. In absolute terms that's a great return and it's even better than the Auto Components industry average of 13%.

See our latest analysis for Schaeffler India

In the above chart we have measured Schaeffler India's prior ROCE against its prior performance, but the future is arguably more important. If you'd like to see what analysts are forecasting going forward, you should check out our free analyst report for Schaeffler India .

What The Trend Of ROCE Can Tell Us

Investors would be pleased with what's happening at Schaeffler India. The data shows that returns on capital have increased substantially over the last five years to 24%. The amount of capital employed has increased too, by 84%. The increasing returns on a growing amount of capital is common amongst multi-baggers and that's why we're impressed.

The Key Takeaway

To sum it up, Schaeffler India has proven it can reinvest in the business and generate higher returns on that capital employed, which is terrific. And a remarkable 370% total return over the last five years tells us that investors are expecting more good things to come in the future. With that being said, we still think the promising fundamentals mean the company deserves some further due diligence.

On the other side of ROCE, we have to consider valuation. That's why we have a FREE intrinsic value estimation for SCHAEFFLER on our platform that is definitely worth checking out.

Schaeffler India is not the only stock earning high returns. If you'd like to see more, check out our free list of companies earning high returns on equity with solid fundamentals.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.